The Jenkins Act – A bizarre (wacky) law

A legislative measure that lends itself to pranks worthy of the “Guinness Book of Records.”

Imagine that the U.S. Postal Service is not a Federal service, but State run, and that each of the 50 States has its own stamps and rates; so a person mailing a letter from Pennsylvania to New York would buy a stamp that only covered the travel to the Pennsylvania border.

Imagine then, that for the part owed to New York State, the sender has to “file with the tax administrator of the State into which such shipment is made, no later than the 10th day of each calendar month.” The bill will arrive at home… Modern!

This practice dates back to the Jenkins Act, a federal law passed in 1949 that requires anyone who sells cigarettes across a State line to report the transaction to the States’ tobacco tax administrators.

In fact, with the Jenkins Act, the seller could become a sort of judge; the application and the operation of the law would be based, without any possibility of verification, only on his declaration.

How can we be sure that no one will take advantage of this opportunity to use this law, riddled with holes, to take revenge on someone he doesn’t like, or to play a magnificent prank that would be worthy of the Guinness Book of Records?

Recently the Jenkins Act became an unpleasant surprise for thousands of US online shopping customers, who received a tax bill for cigarettes purchased even many years ago. For many people, a bill arrived amounting to some thousands of dollars, a real shock!

Paul Hunn bioIn Michigan, where lawmakers last year raised cigarette taxes to $2.00 per pack, the State Revenue Department has collected more than $2 million since February, according to a Stateline report published on May 3.

Smokers have 30 days to respond to a letter from the State Treasury Department. If they fail to respond they have to pay a 100 percent penalty. The State says if you can’t pay your bill, it could go into collections. And the State Attorney General’s Office says criminal charges could be filed.

But it is a concept of “criminal charges” that is very vague: the Jenkins Act requires the online seller to reveal all his information on his customers and their cigarette orders. But there is no way to check this data; it is based exclusively on the reporting of the seller.

So, basically, it is the retailer, if he chooses to do so, who decides who pays and who doesn’t pay taxes. And what if he, the seller, is a “criminal”?

A Measure Without Proof

1. Shipments

Shipping by mail sometimes leaves evidence, and sometimes it doesn’t. Registered mail costs more because it provides documentation of the shipment, and obviously regular, unregistered mail does not have this documentation.

In cases of regular parcel post shipments, the US Postal Service does not trace the packages. Moreover, a parcel left on the doorstep of the addressee, in theory, might be lost or stolen. Who can be absolutely sure the goods were delivered successfully?

2. Payments

Can there be records of all the passages of money, including payments at the local store or at one’s favorite pub or at the supermarket? Credit card payments are recorded in bank accounts, and in the USA authorities can easily check payments made by credit card owners to a shop. But other methods of payment are not registered even when using a credit card.

This is what happens, for example, with the many companies that offer payment services that let you send money to friends and to online merchants worldwide. The user opens an online account, for example with NETeller, leader of the online money transfer service, and pays into the account with his credit card, a bank transfer or some other means.

NETeller “Provides the quickest, cheapest and most secure way to transfer cash in and out of your wagering account… Opening a NETeller account is like using an online wallet – You are able to deposit, withdraw, and transfer funds instantly.”

From this account, without any further use of his credit card, a user can make all the payments he wants, and these show up only on the account of the site.

Jenkins Act “WORLD-WIDE”

The Jenkins Act specifically regards intra-state sales on the US territory, it does not apply to international shipments; in these cases the package is accompanied by a customs declaration, which is an import request not covered by the Jenkins Act.

A sherif star

“Fined, or imprisoned… or both”

In spite of this, Yesmoke, like all foreign Internet sites, has received from all of the American States, requests to fill in their customer data under the Jenkins Act.

… Penalties: “Whoever violates any provision of this chapter shall be guilty of a misdemeanor and shall be fined not more than $1,000.00, or imprisoned not more than 6 months, or both.”

Revealing personal data referred to orders made by customers is illegal in Switzerland, and Yesmoke cannot comply with such requests, under penalty of serious sanctions.

The bizarre (wacky) side

The Jenkins Act appears to be a very ambiguous and even risky law. An online cigarette seller could present false data on a customer with whom he is in conflict, or worse still, on a person who has never even been a customer, but whom he does not like.

All the seller has to do is include this person’s name in the list, saddle him with a few hundred cartons ordered in the past years by somebody else, and his unfortunate enemy will receive a bill for some thousands of dollars to be paid without any chance of appeal, risking criminal charges. And no one can ever discover what really happened.

It was a great temptation for Yesmoke to hand over a fake list using the New York City telephone directory just to see what would happen. We could have included on our list the names of some Philip Morris lawyers, who have worked so hard against Yesmoke, loading them with a few thousand cartons each.

In a bureaucratic country like America, the unfortunate victims would have had a hard time proving that they were not involved!

  • beth

    So if you rec’d a bill from your state can you fight it? What if you claim to never have received the cigs or never to have ordered them?

    • Yesmoke

      Yes, we believe that you can fight it, but we do not know the legal expenses that you may encounter. You have the right to defend yourself in such case. In fact, if the State was able to collect duty tax, as it should be, you may order one or two cartons, pay duty tax (without supplements, fines and penalties), and think about if it is a good idea ordering again. In Canada, at the time of the Yesmoke shop (2000 – 2005) duty tax for all the parcels were paid to the mailman, and you save still 10 canada dollar per carton. Why in the US they were not able to do so? It seems to us illegal to send a hudge and crazy bill, like a surprise.

  • David

    I received a request from the state of Minnesota to pay taxes on a recent purchase of pipe tobacco. I have been doing this over the internet for at least 10 years and this is the first request I have received. I am inclined to ignore it….is the Jenkins act unique to cigarettes or does it cover pipe tobacco and cigars as well?

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